AEMO to trial integrating VPPs into NEM

April 5, 2019

On behalf of the Australian
Government, the Australian Renewable Energy Agency (ARENA) has announced $2.46
million for the Australian Energy Market Operator (AEMO) to run a Virtual Power
Plant (VPP) integration trial.

AEMO will run the VPP
integration trial over a 12 to 18 month period, focusing on demonstrating the
operational capabilities of VPPs to deliver energy and Frequency Control
Ancillary Services (FCAS).

A VPP is a portfolio of
distributed energy resources (DER) – such as rooftop solar, batteries and
controllable loads – installed behind-the-meter that can be collectively
managed and controlled to deliver services like a conventional power
plant.

AEMO will invite existing pilot-scale VPPs around Australia to participate, including the ARENA-funded AGL and Simply Energy pilot scale VPPs in South Australia.

Under the demonstration,
participating VPPs will operate their portfolio of DER to deliver energy,
system security and local network support services.

ARENA’s funding will
accelerate upgrades to AEMO’s systems and processes to allow smooth integration
of VPPs before they reach commercial scale.

While VPPs are currently at
relatively small scale – approximately 5-10 MW, AEMO forecasts there may be up to
700 MWs of VPP capacity by 2022.

AEMO will also use the data
collected to inform changes to regulatory settings and operational
processes.

ARENA CEO Darren Miller
said the trial is a vital step towards increasing participation of VPPs in the
NEM so they can deliver energy as well as helping to provide system security
and reliability.

“AEMO needs visibility over VPPs and the ability to test how they operate within the market if we want to maximise the benefit both to consumers and to the system. This trial will allow us to learn how to better integrate larger scale VPPs in the coming years,” he said.

“As we transition to a more
decentralised energy system, VPPs have an important role to play in harnessing
the collective potential of consumer owned energy assets like rooftop solar,
batteries, smart appliances and electric vehicle charging. VPPs could see vast
improvements in the reliability of the network and an increase in market
competition which will ultimately benefit all customers.”

AEMO Managing Director and
CEO Audrey Zibelman said this would provide evidence-based learning to advance
the integration of DER into the grid.

“Australia’s energy
landscape is transforming towards a deep penetration of consumer-level
renewable generation and storage capability,” Ms Zibelman said.
“Our
focus is on the operation of the bidirectional system to increase system
security and consumer value for both VPP participants and the power system as a
whole.”